The joint OPEC and non-OPEC ministerial committee, aka JMMC, which is due to meet today in Algeria, has decided to adjust Iran’s declining share in OPEC, a senior energy analyst said.
"The meeting, chaired by Saudis, will discuss the likelihood of boosting output between 500,000 and 1 million barrels per day to compensate Iran's crude that will be eliminated from the market gradually due to the US looming sanctions, set to be imposed on Nov. 4," Behrouz Namdari also told ILNA.
According to the expert, Saudi Arabia and Russia have already planned to replace Iranian oil and now they will discuss the details of each member's share within the organization whether Iran’s Oil Minister Bijan Namdar Zanganeh attends it or not.
"Nonetheless, Zanganeh's absence in the meeting will translate into a strong disagreement with the decision as Iran, OPEC’s third-largest producer behind Saudi Arabia and Iraq, has pledged to block any supply increase to curb rising prices," he said.
Tehran says the price rally was instigated by US President Donald Trump's decision to withdraw from the Iran nuclear deal and reimpose sanctions on Iranian oil sales.
It has also accused arch-rival Saudi Arabia of discrediting OPEC by following instructions from the United States, which is not part of the group.
Zanganeh does not plan to attend the meeting in Algiers.
All OPEC production policy decisions must, in theory, gain 100% approval from its members.
The development comes as oil reached $80 a barrel this month, prompting Trump to call again on the Organization of Petroleum Exporting Countries to help bring down prices.
OPEC, Russia and other allies agreed a deal in late 2016 to slash supply, but after months of cutting by more than the pact had called for, they agreed in June to boost output by returning to 100% compliance. That equates to an increase of about 1 million bpd.
Benchmark Brent oil prices fell by more than $1 on the news of a potential output boost, slipping to below $79 a barrel.
Namdari believes that producers selling more barrels have a greater credit in the market, so losing market share will definitely mean losing influence in the organization.
According to the expert, market observers conceded long ago that US shale oil would destabilize half-a-century-old OPEC.
The analyst noted that the US was set to become the world's largest crude producer after surpassing Russia and Saudi Arabia.
OPEC members are of the opinion that if they do not fill Iran's supply gap in the market, others such as the US will grab the market share.
Experts had warned about the adverse effect of American shale oil boom in the market, as it normally reduces OPEC producers' market share and let the US control prices in long run.
"The US prefers OPEC members not to achieve consensus as it keeps the market in turmoil and prevents prices from rising," he said, adding that besides the US, Russia is also interested in the disintegration of OPEC as it made efforts to replace OPEC with OPEC plus that includes other nations like Russia, Kazakhstan, Azerbaijan and Mexico.
The new development has caused OPEC to lose its organizational character, as its main members are losing their influence.
On Thursday, Trump linked American support for Middle Eastern security to oil prices, as he again ordered its OPEC allies to lower prices.
“We protect the countries of the Middle East; they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!” Trump wrote on Twitter.
